MTR new capital works projects, Hong Kong

Hong Kong rail operator MTR Corporation, in which the Government of the Hong Kong Special Administrative Region of China is a majority shareholder, has adopted NEC4 contracts for a programme of ten new extension projects to its 245 km rail network. 

Construction of the Tung Chung line extension, Tuen Mun South extension, Oyster Bay Station on the Tung Chung line, and Kwu Tung Station on the East Rail line started in 2023 using a mix of NEC4 Engineering Construction Contract (ECC) Option A (priced contract with activity schedule) and Option C (target contract with activity schedule). 

Other projects which are currently at the planning stage include Hung Shui Kiu Station on the Tuen Ma Line, the Northern Link main line and spur line, the Airport Railway extended overrun tunnel the North Island line and South Island line west. Design and other professional service providers have been procured using the NEC4 Professional Services Contract (PSC).

The new stations have been designed from the outset to be low carbon and are being constructed with extensive use of design-for-manufacture-and-assembly (DfMA) and modular-integrated-construction (MIC) techniques. Seven of the new stations have already attained BEAM Plus Provisional Gold or above certification, and each one should be able to achieve an average annual reduction in carbon emissions of 20%.

In recognition of its comprehensive adoption of NEC4 for capital works procurement, MTR was highly commended for the 2024 NEC Martin Barnes Awards for Client of the Year.

Contract awards

The first of the new NEC4 works contracts let were for the Tung Chung line extension in May 2023. The western section, which includes a 1.3 km tunnel and the new Tung Chung West Station, was awarded to Bouygues Travaux Publics under a HK$4.2 billion (£420 million) NEC4 ECC Option C. The HK$2 billion (£200 million) eastern section, which consists of a 1.2 km extension and the new Tung Chung East Station, was won by a Paul Y–CRCC Joint Venture. Both contracts are due for completion in 2029.

Next was a HK$2 billion (£200 million) NEC4 ECC Option C for Kwu Tung Station on the East Rail line, which was let to Dragages Hong Kong in September 2023 and is due for completion in 2027. The largest contract to date is for Oyster Bay station on the Tung Chung line. This was awarded to China State Construction Engineering (Hong Kong) under an HK$ 8.5 billion (£850 million) NEC4 ECC Option C in December 2023 and should be completed by 2030. 

Also awarded in December 2023 was a package of three contracts with a combined value of HK$6.2 billion (£620 million) for the Tuen Mun South extension. Contractor CRBC-Build King Joint Venture is delivering a 2.4 km extension and the new Tuen Mun South and Area 16 Stations under an NEC4 ECC Option C, along with the new Tuen Mun swimming pool under a separate NEC ECC Option A contract. Completion is due in 2030.

An NEC4 ECC Option C contract for Hung Shui Kiu Station on the Tuen Ma Line will be let in 2024, starting with an early contractor involvement stage. A detailed design consultancy contract for the Airport Railway extended tunnel overrun was won by Mott MacDonald Hong Kong in May 2022 under an NEC4 PSC, with construction due to start in 2025 and finish in 2032. A similar NEC4 PSC contract for the Northern Link main line is due to be let in 2024, with construction scheduled for completion in 2034.

Adopting NEC4

MTR general manager of commercial management Scott Mackenzie says MTR’s Capital Works Business Unit currently undergoing a transformation programme to address multiple complex challenges associated with delivering its new wave of projects. 

‘These challenges include highly complex operations interface works, limited industry capability and a lack of professional resources in Hong Kong. To equip our capital works teams to manage these challenges – and building on our experience in the use of collaborative contracting and target costs using our own in-house forms of contract – MTR has adopted the NEC4 PSC and NEC4 ECC for its new projects.’

He says for technically complex and high-risk projects, where the early engagement of the contractor and formation of the delivery team is necessary, contracts now adopt NEC4 ECC Option C with secondary Option X22 on Early Contractor Involvement. ‘For less complex projects we use NEC4 ECC Option A.’

Working collaboratively

Mackenzie says MTR recognises that successful project outcomes require stakeholders to work collaboratively and to build one integrated team capable of achieving a project’s objectives. ‘Whilst behavioral considerations have long been a part of MTR’s procurement process, with MTR’s shift to the NEC4 form of contract a high degree of collaboration will be essential for the success of these projects.’

He says MTR has adopted a more formal collaborative behavioral assessment into the procurement process. ‘In line with NEC obligation to work in a “spirit of mutual trust and co-operation”, this focuses on the parties’ and individuals’ ability to work in an open manner, within a single team with focused on delivering mutual objectives.’

Mackenzie says a fundamental part of the transformation programme is the creation of centres of excellence, under which every member of the Capital Works Business Unit is assigned a ‘home’. ‘This provides for more proactive career management and a greater level of direct staff engagement, which is key to implementing workplace empowerment’.

He adds that with a streamlined approach to project governance, MTR is also able to empower staff and accelerate decision-making by delegating authority to staged governance forums. ‘Enhanced collaboration and teamwork across project boundaries and departments – with shared objectives – fosters a “we before I” approach which improves efficiency, productivity and project outcomes.’

Project highlight video (Chinese)

Benefits of using NEC

• NEC is helping MTR’s Capital Works Business Unit to transform to a more collaborative contracting approach do deal with increasing project complexity and resource shortages.
• In line with the NEC obligation to work in a “spirit of mutual trust and co-operation”, procurement now focuses on bidders’ ability to work in a single team focused of delivering mutual objectives.
• NEC works contracts can be tailored to suit project complexity, with ECC Option C and secondary Option X22 for complex high-risk projects and ECC Option A for others.